What are the Advantages of a Prepaid Credit Card?

Prepaid cards are good alternatives to credit cards.

I use to work as a customer service representative, and we would sometimes advise a customer to use a prepaid credit card for payments, in lieu of a credit card. I didn’t really know what a prepaid credit card is back then as Philippine banks are not yet offering them.

– If you are into online shopping, but do not want to use a credit card, a prepaid credit card could be of help.

– Your credit limit is dependent on how much you want to “load” into the card so you have full control of your spending. Say you want to book a hotel at Php2500, you may only reload that amount, process your booking, and you’re done.

– No monthly bills. Since this is prepaid, you will not receive bills at the end of the month!

– No maintaining balance required. And for some banks like UnionBank, your prepaid account can also function as a savings account.

– Reloading is easy. Most banks allow you to reload via online transfer or thru an ATM.

Are there any disadvantages? Personally, the annual fee which cannot be waived is quite a turn off. Other credit card perks, such as installments, are of course not possible with a prepaid card. Also, you cannot withdraw your money (or your load) via ATM.

What are the differences of a prepaid credit card and a debit card? I could only think of one – unlike a prepaid credit card or regular credit card, you cannot use a debit card for online payments (not counting bills payment).

Making online payments are unavoidable these days, and if you do not have a credit card or if you want to play it safe, prepaid cards are the way to go. I think most banks offer them now, but I noticed that only BPI and UnionBank are actively promoting their prepaid cards.